Retirement plan sponsors are the first, and most important, line of defense in providing employees with well-managed retirement savings plans.
Cloud computing has given consumers and businesses access to all sorts of information when they need it at their fingertips—whether they’re sending emails from home, accessing files during a lunch meeting, or uploading a presentation at the office. A 2018 White House report cites that 93% of businesses and organizations utilized some form of cloud computing for software, platform, or infrastructure services1.
As the number of businesses accessing the cloud for information storage and access increases, so does the risk for a cyber attack. Corporate computer systems and networks that house huge amounts of personal and sensitive data belonging to clients, customers, and employees have all become susceptible to cyber threats.
Regardless of the size of the business, data is stolen each and every day, resulting in losses in the billions of dollars. According to the 2018 report by the Council of Economic Advisers, malicious cyber activity cost the U.S. economy between $57 billion and $109 billion in 20161.
As data breach consequences grow, leaders must understand their data security risk. Companies face increased scrutiny from regulators, litigants, business partners, and their customers so leaders must make informed cyber security decisions.
In the spirit of complete transparency, we should note that cyber liability insurance will not enhance your cyber prevention software or keep your passwords and sensitive information from being hacked, but it will assist you in the event of a data breach, allowing you to quickly act and resolve the situation.
Data breaches and company reputation
In addition to the more quantifiable costs that companies incur from a cyber breach, businesses must also pay adequate attention to the long-lasting reputation effects a breach could have on their brand.
After a breach, if the situation is not handled expertly, businesses can lose an immense amount of their customer’s trust. Your company’s reputation is a big selling point to customers when they choose where they want to buy. It can take years to build this rapport with clientele, and for it to be taken away with one cyber breach can be devastating.
According to a Varonis analysis of companies’ reputations after a data breach:
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80% of consumers will defect from a business that has compromised their data
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85% of consumers will tell others about their negative experience
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5% will use social media to complain about the business
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52% of consumers would pay the same for products or services from a different brand with better security
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52% of consumers said that security is an important or main consideration when deciding where to purchase products or services
If your company information is compromised, customers may choose to no longer trust your business and begin to take their business elsewhere. Regaining trust is an uphill battle, and one that you may never win when a cyber breach presents itself. Unfortunately, even when your company has done its best to protect sensitive data, in the event of an incident, it’s your brand name that is affected.
The Cost of Not Protecting Your Data
Businesses—large and small—often overlook their susceptibility to cyber-attacks, assuming that because they have optimized security measures for their company data, they are safe. Likewise, business owners may assume that their general insurance policy will adequately cover the costs of a cyber breach. But they have likely not considered the full scope of the fallout that can happen after a cyber attack.
Here are some of the costs associated with a data breach for businesses:
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Loss of Internet Protocol (IP) address
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Loss of strategic information
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Increased cost of capital
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Damage to reputation
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Loss of data and equipment
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Loss of revenue
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Forensic analysis of breached systems
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Cost of cyber security improvements
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Court settlements and fees
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Regulatory penalties
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Public relations costs
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Breach notifications
You owe it to your business and your customers to take the necessary steps to protect sensitive information. While cyber attacks are devastating for those who are ill-prepared, cyber liability insurance provides valuable resources to help regain lost business. Policies generally safeguard against viruses and hacking and step in if a breach does occur. Some policies may also cover liability for web content. In addition to helping you with the aftereffects of a breach, cyber liability insurance equips you with a plan of action should the unfortunate occur.
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